CESTAT Chennai Holds Customs Appeal Abates After Death of Sole Proprietor, Dismisses Revenue’s Plea
Pranav B Prem
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai Bench, dismissed an appeal filed by the Revenue, holding that proceedings cannot be continued against a deceased sole proprietor in the absence of a proper application for substitution by legal heirs. The Bench, comprising Member (Technical) M. Ajit Kumar and Member (Judicial) Ajayan T.V., concluded that the appeal abated as per Rule 22 of the CESTAT (Procedure) Rules, 1982.
Background of the Case
The case arose out of an appeal filed by the Commissioner of Customs, Chennai-II, against the Order-in-Original Nos. 101557 and 101558/2023, dated 30.03.2023, issued by the Principal Commissioner of Customs (General), Chennai. The adjudicating authority had dropped charges against Unik Traders in relation to alleged mis-declaration of country of origin for goods imported under the ISFTA/SAFTA schemes. According to the Directorate of Revenue Intelligence (DRI), the respondent had imported areca nuts and black pepper by falsely declaring Sri Lanka as the country of origin when the goods were merely transshipped through Sri Lanka.
Following the investigation, multiple show cause notices were issued to the respondent between 2019 and 2020. However, after considering the matter, the adjudicating authority discharged the noticees from all liability. Aggrieved by this, the Revenue filed an appeal before the Tribunal along with miscellaneous applications for early hearing and stay.
Death of Sole Proprietor and Legal Developments
While the appeal was pending, the Tribunal received an email dated July 3, 2025, from the legal heirs of the respondent, submitting the death certificate of Hanif Thara, the sole proprietor of Unik Traders, who had passed away on June 21, 2025. The legal heirs requested abatement of proceedings as per the applicable rules. Upon verifying the authenticity of the death certificate, the Revenue was granted time to respond.
The Revenue, represented by Anoop Singh, argued that the business operations of Unik Traders continued even after the death of the sole proprietor, with Bills of Entry filed in June–July 2025. It was contended that Asif Thara, the Power of Attorney holder, was the “beneficial owner” under Section 2(3A) of the Customs Act and should be treated as the respondent.
Tribunal's Findings
The Tribunal rejected the Revenue’s submission on multiple grounds:
The allegation that the Power of Attorney holder was the beneficial owner was not reflected in the original show cause notice or appeal memorandum.
As per judicial precedent, including Toyo Engineering India Ltd [2006 (8) TMI 184 - Supreme Court / 2006 (201) E.L.T. 513 (SC)], contentions raised during the hearing cannot improve upon or expand the scope of allegations made in the appeal documents.
A Power of Attorney holder acts strictly on behalf of the principal and derives no independent rights. With the death of the principal, the power of attorney stands revoked by operation of Section 201 of the Indian Contract Act, 1872.
The Power of Attorney holder was not even named as a respondent in the appeal, and hence the Revenue could not now attempt to revive proceedings against him.
The Tribunal also emphasized that the customs duty liability rests with the “importer” as defined under the Act. Unless the law expressly provides for recovery from legal heirs, such proceedings cannot be continued after the death of a sole proprietor.
Legal Precedents Considered
The Tribunal relied on the landmark Supreme Court decision in Shabina Abraham v. Collector of Central Excise and Customs [(2015) 322 ELT 372 (SC)], where it was held that in the absence of enabling statutory machinery, no proceedings can be initiated or continued against a dead person. The Bench also considered the Madras High Court’s decision in S. Hidayathullah @ Mannady Bharakath (Died) v. Commissioner of Customs [2025 (5) TMI 590], which reinforced the same principle. A similar view was echoed in a previous CESTAT decision, Shri S. Kanappan v. Commissioner of Customs (Imports) [Final Order No. 41525/2024], where it was ruled that proceedings abate unless legal heirs are brought on record within 60 days.
Verdict
The Tribunal concluded that under Rule 22 of the CESTAT (Procedure) Rules, 1982, the appeal automatically abated on the death of the sole proprietor, as no application for substitution had been filed by the department. The Bench dismissed the appeal and the connected miscellaneous applications, reiterating that proceedings against a deceased person cannot be continued in the absence of statutory provisions permitting such action.
Appearance
Shri Anoop Singh, Authorized Representative for the Appellant
Cause Title: Commissioner of Customs V. Unik Traders
Case No: Customs Miscellaneous Application (EH) No. 40700 of 2025 And Customs Miscellaneous Application (Stay) No. 40701 of 2025 and Customs Appeal No. 40796 of 2023
Coram: Hon’ble Shri M. Ajit Kumar [Member (Technical)], Hon’ble Shri Ajayan T.V. [Member (Judicial)]
